BHAUS EIGHT June 2023 Newsletter

Hello community,

Summer has finally arrived! Today is the official first day of summer, and this also happens to be the Summer Solstice. Today will be the longest day of the year, as we’ll be getting 16 hours of sunlight, so be sure to enjoy it!

Do you know what the summer solstice actually is? It occurs when the sun reaches its highest and northernmost points in the sky. For the Northern Hemisphere, this marks the start of summer, for our friends in the Southern Hemisphere, this marks the start of their winter. Hence, our friends Down Under and Patagonia are about to start their winter fun, while we are ready for fun and long days of summer sun!

In this month’s newsletter,…

• The Southbay Real Estate section has the latest local stats and trends, giving you all the info needed to get your home on the market

• Home Stats by City

• The Economy & Mortgage News has the latest updates on inflation, consumer spending, and up-to-date mortgage rates.

• Investor Corner continues with our “Buying Abroad” series. This month we are taking you to Spain! For inspiration during our research, we looked at homes (fincas and villas) in the Balearic Island of Ibiza, known as much for its techno parties as for its zen and family-friendly areas in the north.

  Have you followed us yet? make sure you are following us on Instagram and/or Facebook to get updates that are not sent to our mailing list! These updates include Open Houses, quick stats, inspiration for your home and your travels, as well as our exciting house viewings!

SouthBay Real Estate.

Last month we saw a dip in the average and median home prices across the Southbay, and across all property types. The total # of closed sales went down vs last year and last month, and so did new listings coming in the market.

In May, average home price across all Southbay cities was $1.4MM, while we had 354 properties close in an average of 33 days on market. Inventory remains low, with 408 new listings coming in the market, roughly a 30% dip versus new listings last year.

While the high interest rates are keeping many sellers out of the market, those who are coming in are being rewarded by the multiple buyers interest as buyers compete for limited options, depending on price points and on areas.

Of the cities we report on, those located on the coast had price increases. Manhattan Beach median price of $3.51MM was a 30% increase vs last year, while Hermosa $6.5MM median price represented 113% increase (note that HB median price has outliers with some very high-price homes selling in May).

Cities in the PV Peninsula as well as more inland locations saw some price drops last month, but certain price points are still generally very competitive seeing multiple offers and selling above asking when priced correctly.

Home Stats by City.

Economy & Mortgage News.

According to C.A.R., macro indicators point to an economy that remains in the upswing. Jobs were added with a year-to-year gain of 2.4%, keeping the unemployment rate at 4.5%. Generally speaking, California real estate bounced back after seeing dips in March and April. Existing home sales increased by 10% vs last year, which may have been prompted by the dip in mortgage rates.

As you may have heard, the Federal Reserve had their June meeting and did not raise interest rates. While that was a sign of relief, Fed Chairman Powell did suggest that the Federal Reserve is ready to raise interest rates by another 50 bps by end of the year to continue to fight inflation.

The pause on rates was welcomed, and combined with the lead up to the debt ceiling debate, kept rates steady in the high 6s, with a 30-year conventional mortgage hovering around 6.95% at the beginning of this week. Given the Fed suggestion that they are ready to raise rates again, analysts foresee mortgage rates climbing to 7% again. Analysts do expect interest rates dropping, albeit at a slower pace than originally expected, according to C.A.R.

Investor Corner.

Continuing with our second home market chats, this month we are taking you to a heavenly place in the Mediterranean coast! We are going to Spain! As inspiration, we have looked through many villas for sale in Ibiza, one of the Balearic Islands known for techno parties as much as zen, with its beautiful beaches, clear water, white-washed facades, wild nature, and amazing sunsets.

Purchasing property for non-EU citizens is definitely a possibility within the EU. There are things you need to be aware of before starting your process so you can plan ahead, and we have a quick rundown for you here, courtesy of our friends at Villa Contact Agency in Ibiza.

There are no restrictions on property rights for foreigners, and unlike other countries, foreigners are able to obtain a mortgage.

An attorney will handle the transaction and will carry out the buyer’s due diligence, including:

• Obtaining confirmation of title

• Checking any pre-emption rights of current tenants (if any)

• Checking any fees due such as liens, other debt, etc

• Checking property deed to verify property line/dimensions

• Checking property has the proper licenses for living purposes (rental, second home, primary residence)

• Checking any work done complies with local building & planning regulations

Fees to pay:

• Real estate agency fees: 5%-6% usually paid by Seller (but always negotiable)

• Attorney fees: 1%-2% depends on the attorney a buyer chooses

• Notary fees: between 0.5%-1% of purchase price

• Property Registration fees: new owner must register the property with the land registry, the cost is usually around 1% of purchase price. The time limit for registering is no more than 2 months after purchase is complete.

• Banking costs: in order to complete the purchase, the buyer will need to open an account with a Spanish bank and transfer funds from home country. At closing, buyer will need to provide a cashier’s check, which usually costs around 0.4% of check value.

• Transfer Tax ITP (Impuesto Transmisiones Patrimoniales) for private individual transfers: levied as % of purchase price on a sliding scale (up to 400K Euro/8% tax, above 400K Euro/9%, above 600K Euro/10%).

  • If other type of transfer, then buyer pays VAT

• Property financing: a lender will most likely lend a % of the property valuation or purchase price of the property, whichever is lower, with a max of 70% (many lenders limit to 60% for those who live outside of the EU. Similar to the US, the timeframe for mortgages is anywhere between 20-30 years.

• Rental Income: in order to have the ability to rent your property, you need to obtain a license (some homes for sale already have the license ready to transfer to new owner). If you are able to rent out your property, you can expect a yield of 5%-7% in rental income during the summer months on a 4-bedroom property.

We have partners in many international countries and can help guide you to the right local broker when ready. Don’t hesitate to call us with any questions before you start your search!

Contact your BHAUS EIGHT team with any comments or questions!

To subscribe to our weekly emails of investor opportunities and our digital newsletter, please email Sonia directly at Sonia@bhauseight.com

From BHAUS to yours.